Tough — and likely unpopular — decisions await lawmakers in 2013 in a state faced with a projected $1.1 billion budget shortfall, “systemic” budget problems and the prospect of daunting demographic changes.

How will Minnesota’s political leaders and residents make those choices?

The answers won’t be found by looking back, Citizens League executive director Sean Kershaw told us. “The old arguments are not relevant any more. For most of the issues that matter going forward, the solutions of the past aren’t even applicable.”

Rather that re-playing the partisan arguments of years’ past, we need a “new piece of paper,” he said. “We need to write a new set of rules.”

The state also needs “governance,” rather than “government,” Kershaw maintains. “With governance we can work to solve these problems,” rather than insisting that the other side “compromise on an argument we’ve been having for 20 years.”

To govern is to choose.

Many say they are committed to avoiding the temptation to use accounting shifts and other such moves to balance budgets, including, for example, the $2.4 billion borrowed this biennium by delaying payments to schools.

“We’re done with the gimmicks; we’re done with the games,” Gov. Mark Dayton said last week.

While policymakers seek to fix the stubborn surplus-deficit cycle that has resulted in eight budget deficits in the last 11 years, the tax-increase pressure is on. There’s pent-up demand for spending, with Democrats controlling the Legislature and governor’s office for the first time in more than 20 years. The line is forming, and the “wish list” already includes an education-finance reform plan that would cost an extra $634 million a year, an early-childhood education initiative with a $150 million per year pricetag and a transportation funding proposal that would involve a higher state gas tax, an increase in the sales tax in five Twin Cities counties and other fee hikes to raise at least $50 billion more for roads and transit over the next 20 years.

With such spending, the state becomes still more deeply involved in the “business” of governing — running our schools, public safety and infrastructure. It’s already deeply involved in the “business” of health care — and will be even more — with the advent of Minnesota’s proposed health insurance exchange, which by 2015 is expected to cost $54 million to operate.

At a meeting last week with DFL leadership, Minnesota Chamber of Commerce board members made clear their position that any discussion of tax reform must be preceded by discussion of spending reform, Chamber President David Olson told us.

The chamber also welcomes implementation by the governor and Minnesota Management and Budget of “meaningful performance measurement for state government spending,” Olson said. “Finding efficiencies in spending is a good first step.”

The Legislature should debate and determine what are our priorities — whether they’re K-12 education, higher education, health care — and fund those priorities, Olson said. “If it’s not a priority, the program or department should be under the microscope to see if we really need to spend those dollars.”

Across-the-board reductions, in which every agency reduces its budget by a set percentage, are the worst way to cut, said Mark Haveman, executive director of the Minnesota Taxpayers Association. The challenge is to identify “mission-critical” programs, and do so with precision, “with a scalpel, rather than a cleaver.”

The across-the-board cuts are a first impulse, an easy way out. It’s much harder to make real choices about what we want government to do.

But framing the debate around what government should keep and what it should let go is the wrong approach,” Kershaw warns. “The focus should be on what we can do differently — and better — rather that what we should stop doing.”

He cites tax expenditures — that is, tax breaks for activity that some Legislature, sometime, decided to favor — for example, as a promising area for reform. For every dollar subject to Minnesota tax, 60 cents goes to education, health care and other public expenditures, and 40 cents goes to tax expenditures and loopholes, according to Revenue Commissioner Myron Frans.

The hard work of making choices, involves “taking good principles of tax and public finance policy and informing it with great research,” Haveman said. Social values, however, often “play the largest role and represent the biggest sticking point. There’s no magic bullet.”

In these times, the social value of spending-restraint should be more than apparent. Let’s start there, while working on what we can do differently and better.

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